Chen Jun, general manager of a State-owned shipbuilding corporation's subsidiary in Shanghai, sought cooperation with major shipyards in Asia in the late 1990s to help build China's own liquefied natural gas, or LNG, carrier.
However, Chen and his colleagues were given the cold shoulder. They were even told by their Japanese counterparts there was no way Chinese shipbuilders would be able to build their own LNG carriers in the next 20 years.
Large LNG carriers are considered by the shipbuilding industry to be just as challenging to construct as aircraft carriers and luxury cruise ships.
In the late 1990s, Japan and South Korea dominated the LNG carrier construction market. As a result, Chen's company — Hudong-Zhonghua Shipbuilding (Group), a subsidiary of China State Shipbuilding Corp, or CSSC — searched for partners across Europe, and European shipbuilders expressed great interest.
In 1999, an agreement was reached between Hudong-Zhonghua and the French companies of Gaztransport & Technigaz, or GTT, for patent technology, and with Chantiers de l'Atlantique for design technology, Xinhua News Agency reported.
"The LNG carrier construction market shifted from Europe to Asia, but instead of cooperating with Chinese shipbuilders, other Asian shipyards wanted to continue dominating the sector," Chen said.
However, in 2008, Hudong-Zhonghua completed the maiden delivery of China's first self-built LNG carrier the Dapeng Sun, and such dominance ended.
Chen heads the giant ship manufacturer, which is located alongside the Huangpu River in Shanghai and has more than 20,000 employees. His enterprise has delivered more than 40 vessels, and last year it received orders to build 37 LNG carriers.
Thanks to the efforts of Hudong-Zhonghua and other Chinese shipyards, China has made huge strides in the LNG carrier sector. The country received more than 30 percent of new orders globally last year, up from 7 percent a year ago — making China a major player in LNG carrier building.
Chinese shipyards received a record 55 orders for LNG carriers last year, solid proof that the nation's shipbuilding industry has cashed in on soaring global demand for such vessels, making China an important player in global energy transportation.
As the world's largest shipbuilder, CSSC received 49 orders for LNG carriers last year, raising its global market share from less than 7 percent in 2021 to about 30 percent. Hudong-Zhonghua snatched the lion's share of 37 orders.
In a recent interview, People's Daily quoted Li Yanqing, secretary-general of the China Association of the National Shipbuilding Industry, as saying, "This achievement has ended the market domination of a few nations in building LNG vessels, launching a new phase in the gas carrier sector."
Work proceeds on giant ships at Hudong-Zhonghua shipyard, which has more than 20,000 employees and is located on Changxing Island in Shanghai. [PHOTO/CHINA NEWS SERVICE]
Decades of efforts
Hudong-Zhonghua's delivery schedule is full until 2027. However, Song Wei, its chief engineer, said this is not down to luck, but to persistent hard work and a strong determination to overcome difficulties.
Due to this special form of natural gas, shipping it in a liquefied state at a temperature below — 163 C is the most cost-efficient method.
It costs more than 1 billion yuan ($139.8 million) to build a single LNG carrier, equivalent to the cost of constructing two Boeing 737 aircraft.
A 174,000-cubic-meter LNG vessel typically carries about 100,000 metric tons of LNG safely across thousands of kilometers of ocean. Building such specialized cargo carriers requires state-of-the-art manufacturing techniques, as the vessels are made from more than 1.1 million components.
Responding to the central government's call to build domestically-made vessels, Hudong-Zhonghua launched the LNG project in 1998. It decided to introduce patented technology for a liquefied cargo containment system from GTT of France.
In March 2002, the shipyard won the bid for the LNG project in Guangdong province to construct two 147,000-cu-m carriers, with the option of building an additional vessel.
Construction of China's first home-built LNG carrier started at Hudong-Zhonghua in December 2004, and the vessel was delivered in April 2008.
"By the time our first ship (a first-generation vessel) was delivered in 2008, a second-generation LNG carrier had been built by a South Korean shipyard," Song said. As high-value-added vessels, LNG carriers have been upgraded from generation to generation due to constant market demand for higher efficiency.
Following a requirement to load more LNG with less consumption of energy, in 2007, a team of about 30 led by Song started work on independently researching and developing the second-generation Changjian series. Hudong-Zhonghua received its first order for this model in 2010, and it went into operation in January 2015.
"This was a key turning point and proof that Hudong-Zhonghua was capable of developing and building large LNG ships on its own," Song said. "However, at the time, global LNG carriers were entering the third-generation phase."
The shipyard kept narrowing the gap with its international peers by introducing the third-generation Chang'an series and fourth-generation Changxing series, receiving the first orders in 2012 and 2017, respectively.
"Facing fierce competition from top shipbuilders in South Korea, our annual new orders have maintained at between 6 percent and 8 percent of the global total for the past few years. We have continued to sharpen our development capability to win increased international recognition," Song said.
In December 2021, Hudong-Zhonghua unveiled a fifth-generation 174,000-cu-m LNG vessel in its Changheng series, and received 34 orders for these ships last year. Its global market share rose from less than 7 percent in 2021 to 21.8 percent last year.
Compared with the previous generation, the Changheng series reduces more than 10 tons of carbon emissions on a daily basis. In addition, the shipbuilder said the new model can carry 800 cu m more LNG than the previous generation.
Work proceeds on giant ships at Hudong-Zhonghua shipyard, which has more than 20,000 employees and is located on Changxing Island in Shanghai. [PHOTO/CHINA NEWS SERVICE]
Never alone
Hudong-Zhonghua has mastered the techniques for building the world's most advanced LNG carrier, but has faced competition.
In 2002, when it bid to build China's first self-developed LNG carrier, it was confronted by a major domestic contender, Jiangnan Shipyard (Group) Co, another unit of CSSC based in Shanghai.
Hu Keyi, chief of corporate technology at Jiangnan Shipyard, said, "We created a research and development team for LNG carriers as early as 1997."
However, the shipyard, which dates to 1865, lost out to Hudong-Zhonghua, as it had insufficient construction facilities for the vessel.
Hu said Jiangnan Shipyard, which at the time was located in downtown Shanghai, simply could not afford to build large vessels such as a 147,000-cu-m LNG carrier. "But we have never given up on the LNG program, and continue our research and development," Hu added.
In 2008, when the shipyard moved to Changxing Island in Shanghai, it expanded its construction facilities significantly and chose a different path to build its own LNG carrier, starting with smaller vessels.
In 2020, Jiangnan Shipyard won its first order for a medium-size LNG ship with a capacity of 80,000 cu m. In March last year, Jiangnan Shipyard and Dalian Shipbuilding Industry Co, located in the coastal city of Dalian, Liaoning province, received their first large-scale LNG carrier orders, adding two more Chinese shipyards to the construction market for large LNG vessels.
Soaring demand
Song said the soaring orders for LNG vessels will boost China's shipbuilding industry in terms of quantity and quality.
When orders held by the domestic LNG ship building sector reach a record scale, this will not only promote the high quality development of the nation's shipbuilding industry, but also ensure energy security, Song said.
China can form a strong and complete LNG industrial chain, Song added.
"There appeared to be explosive global demand for LNG last year due to the worldwide pursuit of carbon neutrality, and a logistics restructuring. Meanwhile, China's LNG demands require massive transportation for such energy," Song said.
Against this backdrop, LNG carriers have become popular in the shipbuilding market.
A total of 182 orders for such ships were placed last year, compared with 83 in 2021, and the number more than tripled the past five years' average of 59, China Newsweek reported, citing data from Clarksons Research.
China imported more than 77 million tons of LNG in 2021, a rise of 18 percent year-on-year, General Administration of Customs statistics show.
Although the comparable figure for last year declined for the first time in seven years, China's LNG imports this year are expected to rise by more than 6 percent year-on-year, the International Energy Agency forecast in its latest Gas Market Report.
Work proceeds on giant ships at Hudong-Zhonghua shipyard, which has more than 20,000 employees and is located on Changxing Island in Shanghai. [PHOTO/CHINA NEWS SERVICE]]
Aiming higher
With research and development for a sixth-generation vessel in progress, Chinese industrial experts are taking a rational view of the future.
Song said the next-generation LNG carrier will combine all the common characteristics of future vessels, including green, low-energy consumption. It will also be easier to manage and operate, and will require fewer repairs and maintenance.
With their much longer history of developing LNG vessels, Song said South Korean shipyards are still better-placed in many respects, such as new technologies, the use of digitalization and intelligence, and a higher localization rate for components and facilities. These shipyards also take less time to build a vessel than their competitors.
For example, it takes 18 to 19 months for a top South Korean shipyard to construct one LNG carrier, while it may take Hudong-Zhonghua 40 to 60 days more, or even longer. A new Chinese shipyard typically spends more than 30 months building a vessel, Song said.
Hu, from Jiangnan Shipyard, said: "Compared with international peers, Chinese LNG shipbuilders lag behind in terms of experience, management and building efficiency. Therefore, each of us should give full play to our strengths."
But Chinese shipbuilders are hungering for more.
Song said: "Even when we are asked for an enhanced performance of just 1 percent, our team is always willing to try all options to make this possible. Such a spirit not only helps us win trust from customers, but also makes us better."
At the start of this year, Hudong-Zhonghua announced a strategy to double its LNG construction capacity. The shipyard plans to build 16 LNG ships simultaneously during the peak time this year.
As it expands its facilities, Hudong-Zhonghua's annual LNG carrier delivery capability will rise from four to five vessels this year to up to 10 in 2025 if the strategy is completed successfully, Song said.
（Picture: Veer）
